Howes sparks a storm

James Massola, Mark Kenny

Union leader Paul Howes' call for a "grand compact" between unions, business and the federal government has sparked significant divisions in the Labor Party and union movement, with one shadow minister questioning Bill Shorten's handling of union corruption.

Prime Minister Tony Abbott has dismissed the proposal but seized on Mr Howes' condemnation of corruption in the labour movement to mount a political attack on Mr Shorten.

The Opposition Leader, in turn, labelled Mr Howes' proposal of genuine co-operation with the Abbott government a "fantasy'', arguing Mr Abbott would not "change his spots" to work with trade unions.

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But Mr Shorten moved to claim the middle ground his political protege had advocated positioning Labor as the party committed to bringing people together.

Mr Howes' stinging attack on a minority of corrupt "criminals" in the construction union provoked significant debate within the Labor Party on Thursday, with senior members questioning Mr Shorten's handling of the unfolding allegations of corruption and malfeasance, revealed last week by Fairfax Media, and questioning why the ALP leader had not put more distance between himself and the troubled union.

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One member of the shadow ministry, who declined to be named, questioned Mr Shorten's political strategy and suggested that given his position as leader was safe following party rule changes, he should have been more forthright in his criticism of the Construction, Forestry, Mining and Energy Union.

"We need to be careful we aren't boxed in by Abbott,'' the MP said. ''He [Shorten] won't do it, but people want more than the standard lines from the leader's office.''

A second, veteran Labor MP suggested that Mr Howes' speech was one the Opposition Leader should have delivered himself.

But a second member of the shadow ministry backed Mr Shorten's handling of the unfolding scandal in the CFMEU - and Labor's political response to the government's decision to refuse a funding request from fruit processor SPC Ardmona.

''Bill wants to take the movement forward, he is not anxious about his authority,'' he said. ''He is anxious about what Tony Abbott is doing to the country.''

Mr Abbott stressed the apparent divisions between Mr Shorten and Mr Howes, declaring the union boss had ''pulled the rug out from underneath Bill Shorten's scare campaign'' that the Coalition government would cut wages and seek to reduce penalty rates. ''[It] was a very powerful assault on everything Bill Shorten has been doing for the last few months,'' he said.

But he added that the idea of a 1980s-style Accord was a ''very 1980s'' idea.

''I certainly think workers and managers need to be partners in the enterprise. Whether we need to have some kind of grand compact between big government, big business and big unions, I'm not so sure about that,'' he told Fairfax radio station 4BC.

Mr Shorten declined to criticise Mr Howes but suggested it was a ''fantasy'' if he believed an Accord-style agreement could be struck between unions and the Abbott government. ''I am not going to engage in some fantasy that Tony Abbott is going to change his spots,'' he told ABC Radio.

A well-placed Labor MP acknowledged that Mr Shorten was not pleased with Mr Howes' speech or its interpretation as inconsistent with his stance on the Abbott government's IR positioning.